14.1 The Internal Market Council was invited, at
the Vienna Summit in December 1998, to report to the Helsinki
Summit a year later on how it would integrate environmental and
sustainable development concerns into Single Market policy. This
followed agreement at the Cardiff Summit under the UK Presidency
to an integration process across all areas of the Council's work.

14.2 After an open debate at the October 1999 Internal
Market Council, a Presidency report was presented to the Helsinki
Council on 10-11 December 1999. We considered this report on 26
January and 10 May 2000,[35]
but did not clear it. We asked the Minister to report to us again
on progress, in particular on the development of specific Internal
Market Scoreboard indicators, noting that, as the mandate for
this work dated from the 1998 Vienna European Council, we would
have expected substantial progress to have been made on these.
We also asked the Minister, Mrs Helen Liddell, to ensure that
we were given an opportunity to consider documents on this subject
before they were discussed in the Council, rather than after,
as happened in the case of this report.

The Minister's letter and Explanatory Memorandum
of 18 and 19 September 2001

14.3 The Parliamentary Under-Secretary of State
for Competition, Consumers and Markets at the Department of Trade
and Industry (Miss Melanie Johnson) comments that some time has
elapsed since we asked for a progress report in May last year.
Work which the Government expected would be carried out under
the French Presidency was not and the Swedish Presidency was left
to take it forward fairly rapidly, through discussion in Internal
Market Working Groups in March, April and May. She recalls that
the Helsinki Summit asked the Council to bring all the integration
strategies to a conclusion and submit them as part of a comprehensive
strategy to the European Council at Göteborg in June
2001, that is, at the end of the Swedish Presidency.

The Strategy

14.4 The objective of the Strategy is to ensure
that further development of the internal market takes account
of the need to integrate environmental protection, as well as
promoting economic growth and social cohesion. It combines the
Community's internal market policy objective, as defined in Article
3 of the Treaty, with environmental objectives set out in the
Commission's proposal for the Sixth Environmental Action Programme[36]
and the Sustainable Development Strategy[37].

14.5 The Strategy proposes a range of actions, including:

effective implementation of Community environmental
legislation. Incomplete and fragmented transposition, application
and enforcement of this legislation can give rise, according to
the Commission, to significant competitive distortions and can
undermine effectiveness. Member States should seek to achieve
the interim transposition target of 98.5% set by the Stockholm
European Council Conclusions by the time of the 2002 Spring European
Council;

improving and simplifying the regulatory framework
and including in it arrangements for effective analysis of the
impact of economic and environmental regulation;

monitoring of notification by Member States of
draft technical regulations under the procedures established in
Directive 98/34. This provides a degree of transparency as to
national measures taken to protect the environment in areas of
legislation which are not harmonised;

the effective application of the principle of
mutual recognition, an important tool for eliminating technical
barriers to trade;

effective action to ensure that environmental
concerns are adequately represented in the process of standardisation;

the evaluation of the Integrated Product Policy
proposed in the Commission Green Paper;[38]

ensuring that an effective Chemicals Strategy
is put in place;

encouraging use of environmental considerations
in Public Procurement;

"The text, at our suggestion,
contains a section on the European Commission's White Paper for
a Chemicals Strategy. Although this is an Environment Council
lead, the strategy is being presented at the Internal Market Consumers
and Tourism Council (IMCTC) as one of its specific objectives
is to prevent the fragmentation of the single market whilst providing
a high level of protection for human health and the environment.

" The mix of regulatory measures, market-based
instruments, voluntary agreements with business and provision
of information on the environmental impact of goods and services
should progress sustainable development, while at the same time
working with the free movement of goods and services, which is
the basis of the single market. Objectives and indicators have
been included for each instrument, which will be vital to monitor
the implementation of the strategy. The only exception is Taxation
and we are pleased to say that the Presidency resisted calls from
some to include them in the taxation section. Indicators on the
implementation of environmental directives which relate to the
functioning of the Internal Market (98 to date) have already been
included in the latest edition of the Commission's Single Market
Scoreboard (May 2001). This should prove an effective monitoring
mechanism for one of the key sustainable development indicators.

"It is important that this strategy dovetails
with the work of ECOFIN and is consistent with the ECOFIN Conclusions
as approved by the Nice European Council. This report stated that
policies aiming for sustainable development should not be limited
to the environment, but should also take into account economic
and social issues. Also that, while the choice of instrument should
be on a case-by-case basis, market-based instruments should constitute
a major part of any policy aimed at sustainable development, as
these are often more efficient than regulation.

"The development of an Integrated Product Policy
or 'IPP' approach at Community level has a significant place in
the strategy. It is seen as potentially providing a general framework
for the other instruments described in section 3. We consider
that IPP thinking does indeed have strong potential for synergy
between the internal market and the achievement of sustainable
development objectives. It envisages a mix of market-facing instruments,
aimed at stimulating consumer demand for greener products and
business leadership in supplying them. The development of this
approach is still unfolding. The Commission published a Green
Paper (presented at the 12 March IMCTC) and, in the light of reactions
from other institutions and from stakeholders, is aiming to produce
a White Paper by the end of 2001. In practice the effectiveness
of the approach is going to depend on how clearly it is focussed
on the specific priorities of the Sustainable Development Strategy[39]
itself. The Green Paper did not have a clear vision of this kind,
but the Government has urged the need to develop one.

"The Presidency Conclusions of the Gothenburg
European Council[40]
not only adopted the Sustainable Development Strategy, but invited
the Council to finalise and further develop sector strategies
for integrating environment into all relevant Community policy
areas with a view to implementing them as soon as possible and
presenting the results to the Spring European Council in 2002."

14.7 Commenting overall on the strategy, the Minister
repeats her predecessor's comment of January 2000, when she said:

"The UK supports efforts
to ensure sustainable development and high standards of environmental
performance within the Single Market while minimising the costs
on business of regulatory measures and maintaining consistency
with open markets."

Conclusion

14.8 We thank the Minister for her full comments
on this strategy. We made a point of asking her predecessor to
provide us with Explanatory Memoranda on documents such as this
for scrutiny before they were agreed in Councils. In the case
of this particular paper, we did not sit between 2 May and 18
July, so it would not have been possible to consider the strategy
before it was put to the Council.

14.9 However, we note that important further
documents connected with the Sustainable Development Strategy
are to be presented to the Spring European Council in 2002. It
would be regrettable if, once again, we did not have an opportunity
to consider these papers before they are presented and we ask
the Government to ensure that drafts are submitted in sufficient
time for us to do so.